How to have more by owning less

How to have more by owning less

Mass digital connectivity and the personal tools that have enabled the sharing economy to flourish have created a climate of transformational change in which many business sectors have been disrupted almost beyond recognition.

Many retail brand names have virtually disappeared from urban high streets as book, record and camera shops are largely bygone relics of the age when shopping experiences were concentrated there. Renting videos and DVDs in person, going to a bank, saving up to buy a car and searching for affordable hotels to stay in are actions that are either obsolete or in decline now that we can go online to use LoveFilm, Netflix, Spotify, banking services, Uber, Airbnb and many other time saving, on-demand and improved value services that a myriad of entrepreneurs want to offer us.

Or if we are among the people with a spare room, attic space or a car parking space to rent out, or even largely unused clothes and furniture, then we can earn some money by offering them for hire to people we are matched up with online. A surplus of personal residential space (a big house!) and a wardrobe of designer label clothing are still regarded by many people as status symbols, helping them feel comfortably higher up Maslow’s hierarchy of needs. Now they are loaned out to strangers.

In crowdfunding – the ‘alternative finance’ area in which I operate as an independent crowdfunding adviser, mentor and personal trainer – those with sufficient disposable income are prepared to support startup businesses launched by people who in some cases they have never even met, either through ordering products that can be at still a prototype stage or for equity in a company they like the look of but which provides no guarantee of successfully providing a return on investment.

So it’s not just a case of technology and connectivity making it easier to behave the same way that we did before. There has been a well-documented and fundamental shift of attitudes towards more emphasis and value on what we can do with money that makes us feel good about ourselves, rather than primarily what we can buy and keep to ourselves to support and project our self-esteem.

Two news items I recently came across in the crowdsourcing/sharing economy heartland of cars and accommodation brought this home to me.

How to have more by owning lessUber commissioned some research among a sample of 2,000 Londoners. 34% of Londoners used an app to book a car in the last 12 months, rising to over 55% of 16-34 year olds. 22% of current car owners would consider giving up their vehicle if they could even more easily get a car on demand by app. 13% of adult Londoners under 30 don’t have a driving licence and have no intention of getting one. London may well not be typical of the whole UK, though the trends appear deeply entrenched among a population that is bigger than that of countries such as Austria, Denmark or Hungary.

While working for a client in the construction sector I read about planning permission approval for a 19-storey tower block in Stratford, London, the main venue for the 2012 Olympic Games. This would be a residential tower block with a difference. Personal space in the 250 units will be scaled down to a minimum that can still satisfy privacy and security issues, to the point of each unit having a “kitchenette” without some of the supposed essential white goods we rely on. The trade-off for limited personal space is that residents will have access to a comprehensive range of communal facilities that not so long ago were the lifestyle trappings of only the better-off. These include a gym, cinema, roof terrace, sauna and hot tubs, library and a food market. It will open late 2018 or early 2019 and rooms will start from £230 a week including utility bills, council tax, wifi, cleaning and gym access

I have spoken with people from several large property developers recently. Planning and building design trends include wider corridors to make it easier to more regularly bring furniture in and out depending on whether a multi-purpose spare room is going to need a hired bed for friends to stay over, or a borrowed table and chairs to invite guests to dinner. In response to recent public consultations, residential projects at planning stages are also often reducing the amount of car parking space to provide more provision for safe and secure storage of bicycles.

These signs of largely Millennial-influenced lifestyle changes may not be for everyone, though they are certainly more than passing fads. This includes using more money, perhaps through supporting crowdfunding projects, to feel good by helping others achieve a personal ambition rather than pursuing a blinkered path more restricted to the acquisition of personal possessions.

If you are one of the growing number of people who seek funding to transform a personal business ambition in to a satisfying reality, then please get in touch for a free initial discussion (in person in London or via Skype) on whether some form of crowdfunding could do the job for you: [email protected], an independent crowdfunding adviser.

Networking with crowdfunders in London (Part 2)

This is the second part of a two-piece blog on attending five crowdfunding-related events in eight busy days in London. As an independent crowdfunding adviser such events give me great insight in to crowdfunding motivations from the perspective of the crowdfunders, the crowdfunding platforms, and investors whether they are high net worth individuals, angel investors or venture capitalists. Here is a link to Part 1.

Networking with crowdfunders in London (Part 2)The fourth event in my sequence of five was a visit to The London Business Show 2016 at Olympia. Among hundreds of exhibitors and scores of seminar presenters I heard Henrik Ottosson of equity crowdfunding platform Invesdor and Bill Morrow, CEO of angel investment platform Angels Den.

Angels Den also ran two live crowdfunding sessions during the day and at one of them I saw pitches from three businesses that were seeking investment. The levels of investment being sought ranged from £60,000 to £250,00 (which had £175,000 already pledged).

  • Networking with crowdfunders in London (Part 2)TrooGranola, a family business making fresh granola and offering 12% equity for £60,000 investment. Already on Tesco’s radar.
  • Flexiapp, a free app for people to find and book a wide range of yoga, dance and fitness classes with a variety of smaller, specialist instructors as well as mainstream providers. Offering 15% for £150,000. Free for users, 30% commission payable from class instructors.
  • Eat Grub, what it “says on the tin” – highly nutritious energy bars made from insects and kinder to the environment than cereal bars. They were chasing the final £75,000 of a £250,000 investment target for 20% equity.

The final event was a combination of entrepreneur and investor perspectives. Equity crowdfunding platform VentureFounders staged an event hosted by Pennington Manches LLP, a leading UK law firm.

Keynote speaker was Justin Urquhart Stewart, co-founder and Head of Corporate Development at Seven Investment Management LLP. SIM “helps individuals and their families manage capital to meet their financial needs and aspirations,” and now looks after over £7 billion of their own and their clients’ money. He gave an entertaining quickfire summary of his take on topical political and economic global developments. Some of his comments included:

  • The Euro is ultimately bound to fail, he said, though not quite yet while Angela Merkel is on the scene. What happens if she isn’t re-elected in 2017?
  • The growth rate of manufacturing in China is slowing down, but not dropping as some media have mistakenly reported. And their services economy is growing too.
  • The emerging economies not doing so well are the ones whose economies rely on exporting natural resources – such as Russia and Brazil. The nations doing better are the ones that import resources and make things, particularly China and India.
  • Trump wants an annual growth rate in the US economy of 5% – but it’s impossible to grow an economy that big that fast.
  • The world’s overall business growth rate is about 3%, which is also the average of the last 50 years or so. To have reached 3% so soon after the 2008 financial crisis shows the world’s major economies are in relatively good shape.

VentureFounders specialise in equity crowdfunding for companies already in business, so their platform is for scaleups and not startups. There were pitches from four companies whose crowdfunding was at the time hosted on the VentureFounders platform, and between them they were seeking from £500,000 to £1.1m

  • Samba Networks, a mobile software company that addresses advertising avoidance for advertisers and app developers, aiming for £500,000 for 10% equity
  • Fatsoma, an ‘influencer marketing network’, on the day of this pitch they had received pledges of £650,000 out of a target of £1.1m
  • freemarketFX, a peer-to-peer currency exchange for companies with better rates and lower fess than banks
  • Lightpoint Medical make imaging equipment enabling cancer surgeons to remove all affected material in the first operation, reducing the need for repeat operations which is good for both the patients, the hospitals, and other cancer victims who won’t have to wait so long for a hospital bed. Without it, 1 in 4 prostate and breast cancer patients still have cancer left behind after their first surgery. CEO Dr David Tuch received the 2016 Start-up Entrepreneur of the Year Award.

I’m often asked how much equity a client should make available. Or how much money to ask for. Of course the answer is “it depends”, and it depends on a variety of factors, including the company valuation, target market share of the specific business sector any company operates in, and an investor assessment of the likelihood of achieving it. This was adequately brought home by seeing 19 sophisticated equity crowdfunding pitches in 8 days.

If you are considering equity crowdfunding and want to talk with an independent crowdfunding adviser not tied to any particular platform, or maybe you’ve already decided to go ahead and want to get a second opinion on some aspects, please e-mail me at [email protected] or send a Tweet to @Cliveref.

Day One of a global crowdsourcing conference in London focussed on crowdfunding

On April 12 the historic Regent Street Cinema in London witnessed the first full day of the 2016 Crowdsourcing Week Global Conference which focussed on crowdfunding. Here is a recap of the day, writes independent crowdfunding adviser Clive Reffell.

Crowdfunding within crowdsourcing
Conference organiser Epi Ludvik Nekaj of Crowdsourcing Week and the first speakers of the day set the scene. Affordable, mass communication technology enables Epihigh levels of personal connection and interactivity. This has caused a clear disruption to previously accepted ways of appreciating what’s around us and how we access what we want or need. Through C2C networking we can increasingly find what we want without having to go to an established B2C provider – whether it’s goods, services, entertainment or information. And not only are we beginning to increasingly appreciate that the planet’s resources are finite and at risk, but also change our behaviour to reflect this.

A modern Old World generation is happy to have access to what it wants or needs without the proviso of personal ownership. Hence the ‘sharing economy’. Accommodation and travel are the largest sectors of the sharing economy. We share spare bedrooms on Airbnb – an organisation that after just four years has access to more rooms than Hilton Hotels – and empty seats in our cars through Zipcar, LiftShare and BlaBlaCar. And through equity and loan crowdfunding people with adequate disposable incomes are willing to invest in or lend it directly to others who want a chance to create their own business and realise their personal potential.

Panel session: "Can banks afford to ignore crowdfunding?"
Panel session: “Can banks afford to ignore crowdfunding?”

Crowdfunding and banking
In the meantime, traditional sources of business funding from banks that are no longer perceived as trustworthy are increasingly restricted by regulation and compliance. Tech entrepreneurs in their 20s are developing financial tools that banking C-Suite bosses don’t even understand, let alone have the vision to steer their organisations to a future where they may embrace some of them.

Emily Mackay, CrowdsurferSo the supply of funding for startups and SMEs continues to shift. Crowdfunding supported the launch of over 4,000 UK businesses in 2015, said Emily Mackay, CEO of Crowdsurfer.

Crowdfunding data
The demand from entrepreneurs for better crowdfunding information to increase their chances of success has led to a raft of companies collecting, analysing and providing data on the crowdfunding industry. As well as Emily Mackay of Crowdsurfer, Barry James of The Crowdfunding Centre  and Modwenna Rees-Mogg of Crowdrating were also on stage during the day.

Crowdfunding platforms
Crowdsurfer estimates there are almost 1,800 crowdfunding platforms around the world. Between them they offer opportunities for backers to support businesses in a wide range of industry sectors, and for platforms such as Ethex to specifically provide investors with ethically sound opportunities. The site allows people to “invest in businesses that are changing the world for the better,” said Sarah Flood, and it is the top social investment platform in Europe with over £30m invested so far.

Equity crowdfunding platforms were represented by CEO Goncalo de Vasconcelos of SyndicateRoom. To him, the most important aspect is not the money that crowdfunding pulls in but how much is going to be paid out to investors. If the source of the money dries up because investors get disappointed or short-changed then it’s all over for everyone. His own platform reassures investors with a stringent selection of projects they host so that only two out of 77 projects funded on SyndicateRoom have so far ceased trading. The average failure rate among all new businesses is more like 90%.

Fanuel Dewever, Crowd AngelsWith a twist on donations crowdfunding for money, Fanuel Dewever’s Belgian platform Crowd Angels enables projects to directly ask for the goods, services and human resources they require. He identified the biggest reason for projects failing is the lack of a clear demonstrable need for what’s being asked for that will allow backers to feel they have made a contribution to something significant. Issues such as easing a short-term cash flow problem are certainly important to small business owners but it does not get backers queuing up to part with their money.

Who uses crowdfunding?
Fr Frank Haydru of The VaticanThe companies that use crowdfunding are also increasingly diverse. Through the launch of their app Patrum even the Vatican uses crowdfunding to raise money to restore its historic architecture and many of its art treasures, and we heard from Father Mark Haydu (above left) on how this 2,000 year old business approached and handles it.

Christian Smith, TrackRChristian Johan Smith of the California-based TrackR raised over $2m on Indiegogo in exchange for their tracking devices for people to trace and retrieve lost, stolen or simply misplaced items.

Eric Partaker, Chilango_01Eric Partaker of Mexican food restaurant chain Chilango has raised a total of £5.5m, first through a mini-bond that offered interest repayments of 8% p.a. and raised £2.1m and then through an equity round that raised £3.4m. But it wasn’t plain sailing. After the success of their first two outlets the third and fourth ones bombed – at one stage the company was seriously close to going under.

It isn’t easy
Crowdfunding may sound easy when large figures like these are bandied around, though everyone involved with the conference agreed that successful crowdfunding requires thorough preparation and extremely hard work. It isn’t charity, it certainly isn’t easy money, and about 3 in 4 projects fail to reach their target funding level.

If you want to improve your chances of success with the benefit of some professional marketing input, I am an independent crowdfunding adviser. Click here to e-mail me or here to see my website for Comanche Communications & Marketing.

Four live crowdfunding pitches received a guarded response

By independent crowdfunding adviser Clive Reffell.

Live crowdfunding events give entrepreneurs valuable opportunities to deliver their pitches and receive insightful feedback from an interested audience.

DSC_1361An enterprising accountant, Irfan Khalil, has formed a ‘Finance for Startups’ group of over 4,000 people who are interested in equity crowdfunding. Most fall in to one of these four categories:

  • they want to trade some equity for a cash investment in their business,
  • they are looking for investment opportunities,
  • they are at an early stage of considering using equity crowdfunding,
  • or like me they provide professional services that are useful to equity crowdfunders.

Irfan organises monthly meetings at a variety of London venues. There are slots for four or five entrepreneurs to pitch their business investment opportunity in just five minutes to four or five panellists. The panellists have five minutes to ask questions, and then a final five minutes to provide feedback on what they like, what they consider ought to be better thought through, and so on.

At the end of these ‘formal’ proceedings there is then about 45 minutes of networking for everyone there to exchange ideas, experiences and contacts. Each event has a very collaborative feel to it.

February’s event was in Camden. Four entrepreneurs pitched their opportunity to five panellists in front of over a hundred people.

The panel consisted of (r to l):

DSC_1378

  1. Peter Richards, a partner in Venture Pilot, which provides technology organisations with a scalable structure for growth;
  2. Amarjeet Hans, Director of Crystal Clear Business Consultants Ltd;
  3. Raimonda Junkanaite, an entrepreneur and early-stage business adviser who is setting up CrowdVelocity, a crowdfunding-for-donations platform;
  4. John Elsdon, Chairman of the management consultancy Allied Powers;
  5. Akeem Famuyiwa, an intellectual property specialist and an entrepreneur with a background in pharmaceutical science.

The four entrepreneurs and the opportunities they pitched to the panel and the audience were as follows.

DSC_1369.James Grant, founder of Weavee.co.uk. James is creating an app that connects job vacancies, recruiters and candidates seeking work. This is a competitive area, I have seen several crowdfunding pitches in the last few months based on apps for the job placement market. James was seeking £150,000 and believed this would be the only round of investment required before he started making a profit in the back half of Year One – subject to reaching a minimal critical mass of 10,000 registered job seekers and 100 recruitment consultants. Five job agencies are currently trialling the technology. .James had pitched three months before and the panellists agreed his pitch was getting tighter and he was coming across as more confident.

DSC_1371Next up was Julian Tremaud, founder and CEO of Fanteamz.co. “86% of viewers skip TV ads” he declared, as a way to start explaining that he will provide organisations with an opportunity to hire teams of brand ambassadors to deliver positive word-of-mouth campaigns. He has Spanish partners and they already have successful case histories from South America, particularly in the music concert and festival sector. Julian is seeking £250,000 for 20% equity, and forecasts £21m profit by the end of Year Three.

The panel advised Julian to be better able to explain how the company valuation figure was reached. Another suggestion was try a round of donations crowdfunding before an equity deal.

DSC_1373Third pitch was from James Parker from Instaload. One third of all US truck mileage is with empty vehicles. Freight bookings go through expensive brokers, often at short notice that leaves the drivers stuck with no loads to pick up at their destination to then take on to somewhere else. The growers and manufacturers with goods to shift sometimes never meet or speak to the truckers who deliver their products. To address these factors, Instaload are developing an app that will provide a direct interface between the people with products that need transporting with the smaller truck companies that carry about 20% of the USA’s road freight. This 20% market share was valued at an estimated $114bn in 2014. James was seeking £50,000 to complete the app development in exchange for 10% equity.

The panel suggested it might be too difficult to raise the finance in the UK if it was going to be invested in the US. Investors would not have market knowledge to make a confident decision and generous UK tax breaks would not be available to them. There might also be heavy industry regulation that protected the brokers’ position. Later in the informal discussion it was suggested that potential investors might not believe it credible that they could get a 10% stake in a company targeting a $114bn market for just £50,000.

DSC_1377The final pitch of the evening was given by Borja Goyarrola, director of Gobe! Borja hopes Gobe! will become a travel/lifestyle app populated with content provided by users about their own personal favourite locations and places to go. The sharing of such local knowledge and tips would allow travellers and visitors to experience more of the living contemporary culture of a city rather than look at iconic monuments and exhibits that celebrate past achievements. Borja was a last minute addition to the roster and it was understandable he did not have a presentation available alongside his demo video.

Borja wanted £100,000 to finish developing the app and to pay for some digital and social media marketing. The panel suggested he should target some low-scale income from advertising before he pins his hopes too much on a big spending global advertiser such as Unilever stepping in to support the fledgling Gobe! I know from experience that fmcg giants and their advertising advisers can be rather conservative when faced with new marketing channels and opportunities.

Whilst equity crowdfunding is clearly about raising finance, research shows that more crowdfunding project creators have difficulties with marketing issues than anything else.

What crowdfund creators find difficultI have over 30 years’ experience in various results-focussed marketing roles and have concentrated on crowdfunding since 2014. I’m happy to meet for initial consultations free of charge. How things develop after that depends on the scale and scope of your aims and the extent of your marketing activity so far.

Clive Reffell, founder of Comanche Communications & Marketing and an independent crowdfunding adviser: E [email protected] and Mob 07788 784373.